January 1, 2007
Volume 16, Issue 2

P2P MEDIA SUMMIT NY is Coming

Don’t miss this first-ever DCIA New York Conference & Exposition focused totally on the emerging peer-to-peer (P2P) distribution channel, with a special emphasis on P2PTV. Copyright settlements are finally clearing the way for robust commercial development, and P2P accounts for more than two-thirds of all Internet downstream traffic and three-quarters of upstream traffic globally.

The P2P MEDIA SUMMIT NY is a must-attend event for content creators and rights holders, application developers and distributors, solutions providers and service-and-support companies – and other parties interested in profiting from the realization of the burgeoning P2P marketplace to its fullest potential.

In addition, DCIA Member RawFlow will present a special NYC workshop and live demonstration of SelfCast, its newest entry in the P2PTV category, on the afternoon prior to the Conference. Delegates wishing to attend RawFlow’s P2PTV workshop should contact p2psummitny@rawflow.com directly.

The Conference will be held Tuesday February 6th and the Exposition Wednesday and Thursday February 7th & 8th in conjunction with Digital Hollywood’s Media Summit New York (MSNY). Your early-bird registration for the full Conference & Exposition includes admission to both the P2P MEDIA SUMMIT NY and MSNY, and represents a $300 savings over regular rates for these events individually.

The Conference – at the Princeton Club of New York – presents leaders of this rapidly emerging high-growth industry from around the world. The event features keynotes; policy, technology, and marketing tracks; topical panels and workshops; a special luncheon session; and a networking cocktail reception with live entertainment.

Google Enters P2PTV Market

Google is getting into the Chinese file-swapping market with a pending investment in Xunlei ("Thunder"). Bloomberg has confirmed the investment after weeks of rumors about the deal, but financial terms have not yet been disclosed.

The Shanghai-based company offers a popular P2P program designed to make the downloading of massive video files quick and easy. It has plenty of users – up to 100 million by some estimates. After watching Xunlei expand through several previous rounds of venture capital funding, the Big G has now swooped in and dangled a large wad of cash before the company.

Like many Western P2P companies, Xunlei is now trying to leverage its success by partnering with content providers to deliver ad-supported video. That means that the new investment has certain similarities to the YouTube buyout.

Google has shown a real appetite for risk when it comes to dealing with content creators over the last couple of years. Its core search engine led to spats over intellectual property with questions about web linking, indexing, and automatic thumbnail generation; but Google has recently decided to tangle with much bigger players.

The Google Book Search program generated outrage among many authors and publishers who insist that such a program be opt-in, and they filed suit against Google to stop it. The YouTube acquisition showed the company's willingness to take on a "copyright lawsuit waiting to happen," and so far YouTube has managed to fend off the wolves.

The new investment in Xunlei shows that Google wants a large piece of another such business in China, one just beginning to craft a business model. When seen in conjunction with Google Video and YouTube, it's clear that the company has big worldwide plans for distributing video clips online.

Report from CEO Marty Lafferty

Entering 2007, the DCIA anticipates our most productive year to date for commercial development of the distributed computing industry.

There will also be numerous opportunities for industry participants in other high-growth areas, such as advancement of P2P advertising models, RSS, enterprise P2P applications, search verticals, semantic web integration, P2P browser plug-ins, VoIP, virtual spaces, P2P-based social networks and communities, and enhancing the fundamental efficiency of P2P technologies as a function of international broadband expansion, notably including China.

2007 will show the stabilization of some early entrants in this new space, while there will be a number of interesting new entries that will further define and broaden the huge potential connected to P2P media delivery.

InStat Predictions – 2007 white paper predicts that the P2PTV "Venice Project will be the big viral media sensation of 2007, creating a new model for cost-effective distribution of video and a new platform and business model for content producers – both big and small – to monetize their creations."

InStat backs up its bullish projection by noting that "P2P enables the lowest cost, most scalable distribution platform imaginable," and credits Venice Project’s founders for their "amazing track record building disruptive P2P platforms Kazaa and Skype" – both longstanding DCIA Member companies. As InStat concludes, "The infrastructure and market are ripe for a new video distribution model."

Read/WriteWeb agrees with InStat, observing that P2P will regain momentum: "P2P got approximately $30M in funding for 2007. So 2007 will undoubtedly be a good year for P2P. It will get more accessible, and we’ll probably see web-based P2P interfaces.

BitTorrent has already become a major part of most connected software. For instance, Democracy Player - an IPTV client similar to the Venice Project - has an embedded BitTorrent client.

Internet-based TV will ramp up in 2007. Also we’ll see more of Interactive TV. On this theme, the Venice Project promises free TV all around the world. Mass adoption of IPTV technology in 2007 and BitTorrent will be an important part of the online video landscape too."

Regarding mobile P2P and user-generated content, Read/WriteWeb says, "Mobile web may be the big story of 2007 - certainly in China, Korea and Japan; but perhaps even the US and other ‘behind the times’ places. Related to this is that online/offline mobile technologies like SmartPox may become more popular.Mobile will be a bigger development and advertising platform in ‘07. Also watch for an emerging web-phone market."

Rudy De Waele’s top-ten trends for mobile web in ‘07 include his observation that, "More user-generated content will become available to the phone; opening the way for mobile users to start using new web/mobile 2.0 services on their phones.

Big media youth networks will go mobile allowing users to upload pictures and videos, and create/consume content straight from their mobile phones. And to share with friends (including mobile-forwarding functionality).

The big players will start positioning seriously in the mobile search market.

There will be a rise of ‘smart client’ solutions, for convergence of content and application functionality on mobile devices in general."

Turning to the burgeoning Internet market in China, InStat notes that, "P2P streaming and Internet video sharing remain in their infancy" there. Enormous upside opportunity stems from the fact that "a proper business model" still needs to be found "to produce sustainable revenue for the industry players."

Don Dodge offers his predictions of the top 5 hot areas for 2007, with which the DCIA generally agrees:

"Online Video/TV - YouTube burst onto the scene in a big way last year paving the way for consumer generated video. BrightCove is my pick for the commercial side of Internet TV/Video. (The DCIA believes that P2PTV will emerge in 2007 as the most prominent online video medium).

Browser-based applications - JotSpot, SocialText, WikiCalc, Zoho, ThinkFree, and others released first versions of Office-like productivity applications. Expect to see these apps get better and the competition to heat up.

Mobile web - The press calls cell-phones the third screen (TV, computer, phone). They have it backwards; the cell-phone is the first screen for the younger generation. Mobile applications are hot, going far beyond ring-tones. Location-based services will be hot in 2007. Mobile search is a multi-billion dollar opportunity.

RSS, Blogs, Wikis - These are already hot for the tech crowd but they will go mainstream in 2007. Blogs and wikis will move beyond simple applications to become a platform for applications.

Vertical Search -I have written extensively about the three monster markets for search: mobile search, local search, and classified ad search. Other areas that will be hotter in 2007: people search, product search, and video search."

Among eSchoolNews’ Six Trends for 2007 are DCIA-endorsed concepts of cloud computing and SCORM.

"Eric Schmidt, formerly of Sun, now of Google, proclaims, ‘The servers should be in a cloud somewhere. And if you have the right kind of browser or the right kind of access, it doesn’t matter whether you have a PC or a Mac or a mobile telephone or a Blackberry – or new devices still to be developed – you can get access to the cloud.’

The gathering SCORM (Sharable Content Object Reference Model) is a collection of standards and specifications adapted from multiple sources to allow for the interoperability, accessibility, and reusability of digital materials: everything from a video clip illustrating how cells divide to a PowerPoint explication of a sonnet.

Though SCORM might sound complicated, its desired outcome is quite simple – to facilitate the sharing and reusability of digital learning materials among educators. Educators hope the un-tethering of content from its method of delivery will be a big outcome of SCORM."

And finally, Lore Sjöberg’s Alt Predictions for 2007, includes his notation that, "The record industry’s dubious prosecutions continue, as the major players file suit against several unlikely defendants, including a 3-year-old child, a whippet in Cincinnati, George Gordon Lord Byron (1788-1824), minor ‘Harry Potter’ character Eloise Midgen, and ‘the smell of fresh waffles on a Sunday morning.’ Most defendants settle out of court, but the smell of waffles vows to fight the charges."

Damaka Expands P2PTV Suite

Damaka, a fast-growing communication-and-collaboration software company, has launched VideoMail, which enables users to leave a video (and audio) message for their peers on damaka – and for any other contacts – using a regular webcam.

VideoMail is a new addition to Damaka’s existing set of P2PTV features, which includes IPTV, DialOut, video conferencing, desktop sharing, and FastFile transfer.

Damaka offers its white-label, SIP-based, P2P platform for companies interested in jumping into the triple play solution with minimal infrastructure investment.

According to Damaka CEO Siva Ravikumar, "VideoMail is just one example of how damaka can help small and medium size operators or new entrants in the telco market to offer services that incumbent telcos have yet to provide. Why spend time selling a voicemail service when VideoMail is already there for the taking?"

Damaka recently released its commercial P2PTV service, which provides users free access to BBC News, CNN-IBN, HSN, and many other channels.

The company also recently released its best-in-class P2P multi-party video conferencing (H.263/H.264) as the cornerstone of its P2PTV offering.

The damaka platform is based on industry standards and uses patent-pending technology to provide a secure P2P environment for Internet users worldwide.

Telcordia Advises President

DCIA Member Telcordia Technologies announced that Daniel J. Carroll, Jr., President & CEO, has been appointed by President George W. Bush to the National Security Telecommunications Advisory Committee (NSTAC).

NSTAC, which is comprised of leaders from throughout the communications industry, provides industry-based analyses and recommendations to the President and the executive branch regarding policy and enhancements to National Security and Emergency Preparedness communications policy. This high-profile appointment acknowledges Telcordia’s leadership position in the communications industry worldwide.

"Serving as an advisor to the President of the United States is a great honor," Carroll said. "I believe that Telcordia’s extensive innovation, experience, and reach in the communications industry will be a positive addition to this committee, which helps shape national security and emergency preparedness to protect America’s citizens and its economy."

President Ronald Reagan created the NSTAC by Executive Order 12382 in September 1982. Since then, NSTAC has served four Presidents. The Department of Homeland Security (DHS), through its National Communications System (NCS) group, oversees the committee, which provides advice directly to the President.

The NSTAC includes up to 30 President-appointed industry leaders representing various areas of the telecommunications industry.

Carroll was named President and CEO of Telcordia in September 2005. He has more than 35 years of experience and leadership in the communications industry, including executive-level positions at Western Electric, AT&T, and Lucent Technologies.

VeriSign Distributes Movies

DCIA Member VeriSign, best known for managing e-commerce security and Internet addresses, will start distributing family-friendly movies early this year.

The movie download service will be run by AxiomTV, a subsidiary of Axiom Entertainment.

Axiom is developing an Internet TV channel that will run kid-themed, parent-approved movies and shows. It will deploy technology called "Mother" to block pornography, violence, and foul language.

A test version will launch January 8th, with general availability scheduled for February 1st. Subscribers will buy and install cables and other simple hardware to watch movies on their television.

AxiomTV claims to be the first Internet movie service focused on family-friendly entertainment.

CinemaNow, Movielink, Amazon’s Unbox, and AOL Video are among the online movie services with a wider selection.

VeriSign will be distributing AxiomTV movies through its Intelligent Content Delivery Network (ICDN), which uses a P2PTV system to save costs and improve speeds. With P2P, a movie file might come from a neighbor’s hard drive when available rather than from a distant server.

VeriSign operates the key databases that help computers find websites ending in ".com" and ".net" as well as the machines containing the master list of all of the Internet’s suffixes, such as ".fr" for France. It also sells digital security certificates to help consumers know when an e-commerce transaction is encrypted.

VeriSign Vice President of Broadband Services Todd Johnson will deliver a keynote address at the P2P MEDIA SUMMIT NY.

Skype 3.0 Offers Pando File Transfers

DCIA Members Skype and Pando Networks are using Pando’s P2P file-sharing technology to add file transfer and video RSS functionality to the latest version of soft-phone Skype 3.0.

The functionality will be provided through a Skype 3.0 add-on, Pando Extra, that will enable users to transfer large files and entire folders (up to 1GByte) to Skype contacts and/or any e-mail address, and to send to and receive from offline contacts or contacts away from their computers.

According to Skype’s Director of Developer Programs, Paul Amery, "Extras Manager is a new feature for Skype 3.0 which allows end-users to do more with Skype. For some time now we have been working to enable Skype as a distribution platform for 3rd party add-ons and applications. Applications such as Pando are important in generating new usage and new users for Skype and software partners."

With the Pando Extra, users will be able to send multiple files to multiple recipients simultaneously, post files (e.g., videos, photos, etc.) to any website, blog, MySpace, etc. and subscribe to high quality media RSS feeds.

2007 Key Year for Mobile Video

2007 could prove to be a crucial year for mobile video and content services in the US.

Analysts have been skeptical that charging mobile phone users to use similar or in some cases the same content that they could find on the Internet for free, will work. Mobile users have shown they’re willing to pay extra for text messages, ring-tones, and mobile games, but mobile video has no predecessor.

Also, who’s in charge of the content – the content providers or the carriers? How will revenue be distributed? These are questions that need ironing out.

Nevertheless, companies like News Corp.’s MySpace and Viacom’s MTV are forging ahead, striking deals with major carriers to provide their content – most of which is free online – on mobile phones for a premium. This month, MySpace signed a deal with Cingular that lets its users edit, view, and post photos and video to their profiles as well as send and receive messages.

MTV Networks, meanwhile, has created its own mobile content unit that will make ring-tones, games, videos, and other material based on its brands. Their plans are global, too, as both companies are now in talks with European and Asian carriers. Please click here for the full report from the Financial Times.

China’s Internet Users Rise 30%

The number of Chinese using the Internet increased 30% during the last year to 132 million, a state news agency said.

The rapid rise in Internet use has propelled growth in China’s online commerce, advertising, and games industries.

China’s government encourages Internet use for business and education but tries to block access to material deemed subversive or pornographic.

China will make it easier for individuals to make foreign-exchange transactions this year, setting a yearly quota instead of limits for each transaction, the central bank said. The move is part of the bank’s efforts to streamline the foreign-exchange process, and comes as Beijing’s trading partners urge it to ease strict currency controls.

Web Entrepreneurs Puzzle

For the companies and individuals inhabiting the web’s ever-evolving ecosystem, three big revolutions have taken place almost unnoticed by outside observers.

The first, they argue, was the initial phase – or what they call "Web 1.0" – when corporations like the BBC, Disney, and established newspapers set up virtual shop and reached out to Internet readers and viewers.

Now, they say, the time has come for "Web 3.0" – where both sides will be involved in a complicated tango that is at once a mating dance and a competition. And the question they are all asking is: what will this new phase bring?

The hope, according to many influential players on the web who gathered at a big European conference on the issue held this week in Paris, is money, and lots of it.

But there is also a small fear, perhaps fuelled by Google’s staggering 1.65 billion-dollar purchase last month of the popular YouTube video hosting site, that expectations are too high, and that the coming Darwinian struggle will be brutal.

Web 2.0 "is like controlled anarchy", said Anthony Rose, the Chief Technology Officer (CTO) for the music and movie distributor, DCIA Member Altnet, and one of the 1,000 attendees at the two-day Le Web 3 conference that opened last week.

It could herald in a new era spreading democracy and "empowering the end-user" in a way that will shift the power balance between complacent multinationals and individuals, he argued.

But, he added: "The question we’re asking is, is the Web 2.0 a bubble? Will it have come and gone before most people know what it is?"

The buzz and bustle in the Paris conference hall showed few were troubled by that prospect for the moment.

Computer-toting geeks in T-shirts from more than 30 countries were seen happily pocketing business cards from corporate types from Yahoo, News Corp., Microsoft, and various venture capitalists.

Loic Le Meur, the French web entrepreneur who has held the gathering every year since 2004, boasted that it had sold out within days purely from word-of-mouth and from Internet searches.

"I’ve been fed up for 10 years to see everything happening in the United States," he said, explaining that he wanted to do something to reduce the transatlantic gap in web activity. "We’re seeing the birth of a complete economic sector which is entirely virtual and underestimated in Europe."

An attendee, William Quiviger of Fon, a Spanish-based company trying to build Wi-Fi users into a global network of free hotspots, agreed that a "revolution" was under way. "We’re trying to assess in what direction we’re going... every participant here is giving his or her vision of what Web 3.0 is."

AllofMP3 Responds to Lawsuit

The legal wrangling of various file-sharing developers has created several common response-patterns from those unfortunate enough to face litigation from the Recording Industry Association of America (RIAA). If you’re of the LimeWire ilk, your response may be to stay and fight. If you’re from the BearShare clan, you may wish to settle. Then there’s the Ares Galaxy option: a tactic that focuses on apathy in the face of potential litigation and carrying on business as usual.

AllofMP3.com appears to have chosen the third option in response to a lawsuit filed by the RIAA on behalf of its member companies. The complaint was filed on December 21, 2006, against Media Services (the company which owns AllofMP3.com) in a lawsuit of unprecedented value in the file-sharing realm.

The RIAA charges that AllofMP3 is an illegal service and infringes on their member company’s copyrights because they have yet to see any of the fees collected by the Russian music store. AllofMP3 has quickly become one of the most successful music stores online, namely because of its ability to sell music for less than 10 cents per download. The addition of a DRM-free environment has also helped bolster this service as one of the few viable alternatives to P2P networking - at least in the eyes of the file-sharing community.

AllofMP3 countered the music industry’s claim, stating the service is completely legal in Russia as all necessary fees have been forwarded to the Russian royalty collection firm, ROMS. From there, AllofMP3 feels it is the responsibility of ROMS to divvy up the royalties to the copyright holders.

AllofMP3’s argument has not impressed the RIAA. The December 21st lawsuit argues that 11 million songs were allegedly pirated, and seeks damages totaling $150,000 per violation. That’s a $1.65 trillion lawsuit - a value slightly less than the Gross Domestic Product (GDP) of the United Kingdom in 2005.

In an odd game of reverse "one-upmanship," where in this case each side is less impressed with the argument of the other, AllofMP3 has responded coolly and with indifference to the staggering dollar amount of the RIAA’s lawsuit.

"AllofMP3 understands that several US record label companies filed a lawsuit against Media Services in New York," an unnamed senior company official stated.

"This suit is unjustified as AllofMP3 does not operate in New York. Certainly the labels are free to file any suit they wish, despite knowing full well that AllofMP3 operates legally in Russia. In the meantime, AllofMP3 plans to continue to operate legally and comply with all Russian laws."

The big question of course will be whether AllofMP3, or Media Services, will show up at any legal proceeding based in New York. Although Media Services has legal counsel based in the United States, the tone of the statement suggests a very defiant approach. A representative of Media Services told Slyck.com that a decision on its future legal tactics has yet to be formulated - pending the review of a yet un-received $1.65 trillion complaint.

Coming Events of Interest

2007 International CES – January 8th–11th in Las Vegas, NV. With four decades of history, the International Consumer Electronics Show (CES) reaches across global markets, connects the industry, and enables CE innovations to grow and thrive. The DCIA will moderate the "Next Generation P2P" panel on Wednesday January 10th, featuring DCIA Member executive Andy Cooper, President of INTENT MediaWorks.

P2P MEDIA SUMMIT NY – February 6th–8th in New York, NY. The Winter DCIA Conference & Exposition will cover policy, marketing, and technology issues affecting commercial development of this emerging high-growth industry. Exhibits and demonstrations will feature industry-leading products and services, including the newest phenomenon, P2PTV. For sponsor packages and speaker information, please contact Karen Kaplowitz at 888-890-4240 or karen@dcia.info. Plan now to attend.

CONSUMER 2.0: Meeting the Demands of the Connected Consumer - February 21st-22nd in Toronto, Canada. The era of mass media is giving way to one of personal and participatory media. People no longer passively consume media but actively participate, which usually means creating content, in whatever form and on whatever scale. To remain relevant, advertisers and the media need to tap into this energy for innovation and communication by integrating the social media with their marketing mix.

Digital Music Forum East – February 27th–28th in New York, NY. For the past six years, the most influential decision-makers in the music industry have gathered at Digital Media Wire's annual music conference. They come to network, do deals, and share ideas about the future of the music business. Participants have described the event as a "melting pot of the best of the best in digital music" where ideas are shared and opinions don't go unchallenged.